MR
  • Insurance
  • Mortgages
  • Debt Management
  • Personal Finance
  • Credit Cards
  • Retirement Planning
  • News
No Result
View All Result
Contact Us
MR
  • Insurance
  • Mortgages
  • Debt Management
  • Personal Finance
  • Credit Cards
  • Retirement Planning
  • News
No Result
View All Result
MR
No Result
View All Result
Home Personal Finance

Canada Tax Brackets (2022-2023): Federal & Provincial Tax Brackets

Adeola Adegoke by Adeola Adegoke
August 24, 2023
A A
canada tax brackets
590
SHARES
3.3k
VIEWS
Share on FacebookShare on Twitter

Despite the annual apprehension that often accompanies tax season, Canadian citizens and residents must familiarise themselves with the concept of the Canada tax brackets because your financial well-being can hinge on your understanding of this topic.

Whether you’re a seasoned taxpayer or new to the process, grasping the intricacies of these tax brackets is essential. These brackets dictate the amount you owe to the Government of Canada via the Canada Revenue Agency (CRA) as annual personal income tax.

In Canada, income tax brackets aren’t a one-size-fits-all affair. Tax rates differ for each individual, contingent upon your total annual income and the portion of it that is taxable. 

As you journey through this article, we’ll provide you with a comprehensive understanding of income tax rates and their potential impact on your net income. Join us as we delve into the amalgamation of federal and provincial Canada tax brackets, ensuring you’re well-equipped to navigate this aspect of your finances.

Canada Tax Brackets 2022 & 2023

We are kicking things off with a table comparing the Canadian tax brackets for federal income tax in 2023 to those in 2022:

Federal Income Tax Brackets 2022

Federal Income Tax Brackets 2023

15% on the first $50,197 of taxable income

15% on the portion of $53,359 or less

20.5% on the next $50,195 of taxable income (on the portion of taxable income over $50,197 up to $100,392)

20.5% on the portion of $53,359 and $106,717



26% on the next $55,233 of taxable income (on the portion of taxable income over $100,392 up to $155,625)

26% on the portion of $106,717 and $165,430



29% on the next $66,083 of taxable income (on the portion of taxable income over 155,625 up to $221,708)

29% on the portion of $165,430 up to $235,675



33% of taxable income over $221,708

33% on the portion of more than $235,675

Source: Government of Canada

What are Tax Brackets, and How Do Canada Tax Brackets Work?

At the core of Canada’s income tax system are tax brackets, a fundamental tool designed to determine your annual personal income tax obligations. These brackets function as predefined ranges within which your personally earned income falls. These ranges, often referred to as tax rates, delineate the minimum and maximum amounts of income subject to taxation.

The mechanics of Canada’s tax brackets are intricately linked to your location and your overall income from various sources. Your specific provincial rate hinges on your residency as of December 31st of the tax year. To illustrate, consider a scenario where you relocate from Nova Scotia to Ontario in August. If you reside in Ontario on December 31st, you’ll be subject to Ontario’s provincial tax rates and corresponding tax brackets. This underscores the approachable nature of comprehending Canada’s tax brackets.

The crux of your tax bracket calculation centres on your taxable income—essentially, your gross income from all sources minus applicable tax deductions. The residue that remains after accounting for eligible deductions is your net income.

Once armed with your taxable income figure, you can apply federal and provincial tax rates to your taxable net income. The computation of your total tax liability follows a sequential process: kickstarting with calculating your federal income tax and subsequently factoring in your provincial taxes. This sequential approach empowers you to gain a clear grasp of your overall tax responsibility.

Canada’s Provincial Income Tax Bracket

The table below displays the income tax brackets for some provinces for the years 2023 and 2022. Specifically, we will look at the Alberta tax brackets and tax brackets for the provinces of Ontario and British Columbia.

Province

Provincial Income Tax Brackets 2022

Provincial Income Tax Brackets 2023

Alberta














10% on the first $134,238 of taxable income
 

12% on the next $134,238 and $161,086

 

13% on the next $161,086 and $214,781

 

14% on the next $214,781 and $322,171
 

15% on the amount over $322,171

10% on the first $142,292 of taxable income

12% on the next $142,292 and $170,751

13% on the next $170,751 and $227,668

14% on the next $227,668 and $341,502

15% on the amount over $341,502

Ontario












5.05% on the first $46,226 of taxable income



9.15% on the next $46,226 and $92,454



11.16% on the next $92,454 and $150,000



12.16% on the next $150,000 and $220,000



13.16% on the amount over $220,000

5.05% on the first $49,231 of taxable income


9.15% on the next $49,231 and $98,463


11.16% on the next $98,463 and $150,000


12.16% on the next $150,000 and $220,000


13.16% on the amount over $220,000

British Columbia















5.06% on the first $43,070 of taxable income


7.7% on the next $43,070 and $86,141

 

10.5% on the next $86,141 and $98,901


12.29% on the next $98,901 and $120,094


14.7% on the next $120,094 and $162,832


16.8% on the next $162,832 and $227,091


20.5% on the amount over $227,091

5.06% on the first $45,654 of taxable income


7.7% on the next $45,654 and $91,310


10.5% on the next $91,310 and $104,835


12.29% on the next $104,835 and $127,299


14.7% on the next $127,299 and $172,602


16.8% on the next $172,602 and $240,716


20.5% on the amount over $240,716

Source: Government of Canada

Check out this Service Canada page for a comprehensive list of Canada tax brackets for provincial income tax in 2022 (featuring all the provinces).

Example of Tax Calculation

Imagine a young man named Mira who lives in Manitoba. Mira’s annual income is $350,000, but after his RRSP contribution, Spousal RRSP contribution, home-based business deduction, and other tax deductions and tax credits, he has a taxable income of $205,000. Here’s what his tax calculation might look like:

Mira’s Federal Tax Bill for 2022

15% X the first $50,197 = $7,529.55

20.5% X The next $50,195 = $10,289.975

26% X The next $55,233 = $14,360.58

29% X The next $49,375 = $14,318.75

So, his total federal income tax bill = $46,498.855

Remember, buddies: Mira’s provincial rate is based on his province of residence as of December 31 of the calendar year. That province just so happens to be Manitoba.

Mira’s Provincial Tax Bill for 2022

10.8% X The first $34,431 = $37,18.548

12.75% X The next $39,985 = $5,098.0875

17.4% X The next $130584 = $22,721.616

So, his total provincial income tax bill = $31,538.2515

Mira’s Total Income Tax Bill for 2022

Therefore, Mira’s combined federal and provincial tax is $46,498.855 + $31,538.2515 = $78,037.1065.

Why Do Canada Tax Brackets Matter?

Understanding where your income fits within Canada’s tax brackets is key to unravelling the intricacies of your income taxes. Even a slight increase in income that nudges you into a higher bracket can substantially alter your tax refund from what you received in the previous year. Conversely, it might also lead to owing more taxes than anticipated.

Moreover, these tax brackets are pivotal in shaping your approach towards claiming specific credits and deductions. The bracket you fall into can influence the optimal strategies for when and how to make these claims. 

Ways to Get into a Lower Tax Bracket

When optimising your tax situation, there are two primary avenues to explore: leveraging tax deductions and using tax credits.

Tax credits function as deductions from the amount of taxes you owe on your taxable income. Some of these credits can be refunded, while others are non-refundable. For instance, the GST/HST credit stands as a refundable tax credit, while the charitable tax credit is an example of a non-refundable one.

Additional non-refundable tax credits encompass:

  • Exemptions for taxpayers aged 65 and above
  • Personal exemption amounts
  • Exemptions for taxpayers with dependent children
  • Exemptions for individuals receiving pensions
  • Exemptions for caregivers
  • Exemptions for individuals with certified disabilities

On the other hand, tax deductions involve subtracting specific amounts or expenses from your total personal income. By doing so, your taxable income is effectively lowered, leading to a reduction in the portion of your income that is subject to taxation. Noteworthy examples of tax deductions include deducting self-employed business expenses from your income.

Several common tax deductions encompass:

  • Union or professional dues
  • Pension adjustments
  • Child care expenses
  • Maximum allowable annual contributions to a Registered Retirement Savings Plan (RRSP)
  • Donations to political parties or charitable organisations

Another viable method for reducing your tax burden within Canada’s tax brackets is income splitting. This strategy entails transferring income from a family member with a higher income to another family member with a lower income. The objective is to lower the overall family tax payment collectively.

The underlying principle of income splitting is that by taxing the income in the hands of the family member with the lower income, the family’s overall tax obligation can be significantly diminished. This approach could provide substantial tax relief for families seeking to optimise their tax positions.

Related: TFSA vs RRSP: How to Choose?

Final Thoughts on Canada Tax Brackets

Delving into the intricacies of Canada tax brackets has illuminated how this crucial framework shapes our financial landscape. Navigating the labyrinth of tax rates, deductions, and credits might appear daunting, but we can optimise our tax situations effectively armed with knowledge.

Remember, understanding your tax brackets isn’t just about complying with regulations; it’s about taking charge of your financial health. You can strategically work towards a lower tax burden by exploring the avenues of tax deductions, credits, and even income splitting.

Dive into the world of Canada tax brackets armed with insights and make informed decisions that will make a tangible difference in your fiscal life. Take control of your taxes and pave the way to a brighter financial future. 

FAQs on Canada Tax Brackets

Who Has Higher Taxes the US or Canada?

Many factors determine how much tax an individual pays in the US or Canada. A taxpayer’s personal situation is what determines if they would be in a better position than others in another country. So, it’s not black and white.

It is worth knowing that wealthy Americans can take advantage of many tax deductions. On the other hand, it’s not as easy in Canada when relatively compared to Canada’s Alternative Minimum Tax.

When Must Tax Be Paid?

Taxes have to be paid all year round as it accumulates. Employers subtract an amount for taxes right out of your paycheques and remit it to the government of Canada.

If your employer needs to deduct more in the course of the year, you will be required to pay more when you file your tax return.

However, if your employer is deducting too much or if you have a huge tax deduction or tax credits, you will likely get your money back after you file your annual tax return.

It is not strange to see people filing tax returns by themselves by following the steps in the tax return packages made available by the CRA or by using tax software to file their taxes.

Previous Post

The Best Free Roadside Assistance in Canada (2024)

Next Post

Koinly Review (2024): The Best Crypto Tax Software

Related Stories

how long does e-transfer take
Personal Finance

How Long Does e-Transfer Take? (2025)

by Adeola Adegoke
February 17, 2025
0

If you're in Canada and need to send or receive money, Interac e-Transfer provides a swift, secure, and convenient solution. With Interac, you can easily send or receive money within...

Read more

What is the Cost of Living in Canada? (2025)

What is the Middle Class Income in Canada? (2025)

What is CPC/SCP Charge On My Credit Card? (2025)

What is a Credit Memo in Canada? (2025)

Next Post
koinly review

Koinly Review (2024): The Best Crypto Tax Software

Oas Clawback: Example, Eligibility and 7 Strategies to Avoid It

What is the OAS Clawback? (2024)

Best secured Credit Cards in Canada

The 6 Best Secured Credit Cards in Canada for 2024

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Recommended

First Time Home Buyer Incentive

What is the First Time Home Buyer Incentive (FTHBI) in Canada (2024)

January 12, 2024
Home Insurance Cost in Canada

How Much Does Average Home Insurance Cost in Canada? (2024)

January 13, 2024
how to cancel car insurance

How To Cancel Car Insurance in Canada (2025)

February 17, 2025
Credit Karma Canada

Credit Karma Canada Review (2024): Get Your Credit Score For Free

January 13, 2024

Popular Story

  • Websites Where Men Give You Money

    12 Legitimate Websites Where Men Give You Money in 2024

    13140 shares
    Share 5256 Tweet 3285
  • Best Mutual Funds in Canada: 15 Top-Performing Mutual Funds

    5663 shares
    Share 2265 Tweet 1416
  • 10 Safe Investments with High Returns in Canada (2024)

    4415 shares
    Share 1766 Tweet 1104
  • 10 Best RESP Providers in Canada (2025)

    3771 shares
    Share 1508 Tweet 943
  • World Financial Group Review 2024: Is WFG a Scam?

    3389 shares
    Share 1356 Tweet 847
  • What is a Canada PRO Deposit? (2024)

    2842 shares
    Share 1137 Tweet 711
  • GST Payment Dates 2025: A Detailed Guide on GST/HST Credit

    2544 shares
    Share 1018 Tweet 636
  • 10 Best E-Transfer Payday Loans Canada 24/7 (2025)

    2443 shares
    Share 977 Tweet 611
  • How Much Does it Cost to Have a Baby in Canada? (2024)

    2161 shares
    Share 864 Tweet 540
  • 8 Best Investments in Canada for 2024

    2151 shares
    Share 860 Tweet 538
Facebook Twitter Instagram

Categories

  • Benefits
  • Business
  • Credit Cards
  • Cryptocurrency
  • Debt Management
  • Insurance
  • Investing
  • Mortgages
  • News
  • Personal Finance
  • Product Reviews
  • Retirement & Estate Planning
  • Reviews
  • Tax

© 2021 Money Reverie

No Result
View All Result
  • Contacts
  • Contributors
  • Disclaimer
  • Newsletter
  • Personal Finance & Debt Management Blog in Canada – Money Reverie
  • Privacy Policy
  • Super Visa Insurance Quote
  • Terms and Conditions

© 2021 Money Reverie

Need Help With Anything Finance?

Enter your email address to get valuable personal finance & small business tips from top experts delivered to your inbox weekly.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.